Thursday, May 21, 2009

What happened to stocks today was truly unusual. Despite the Conference Board's Leading Indicators Index rising by 1.0% - the first gain in ten months - investors were not in the mood to continue the 9-week-long rally any further. This is what happens when markets are rigged, when large institutions control the government, the media and the majority of the trading. Stocks will not do what people think they will. It's why the rally came off the lows in March like an uncaged lion, never pulled back at any point and now is so completely overbought that there is no opportunity for buying anymore.

The lone indicator which remained constant throughout - new highs to new lows - got even on Tuesday and backed into the red - favoring new lows - Wednesday, and dipped further Thursday. It clearly has been the most accurate predictor of stock movements, having favored the new highs every day for the last 19 months except on 5 or 6 occasions. Clearly, stocks are headed lower, interest rates higher, and the US economy into the abyss.

The decline was broad and could have been more pronounced, but that is a story for another day, when there is actual news to send the market reeling and investors seeking safe havens (in bonds and gold). No, this decline, back to the March lows some 1800 points on the Dow down below, is going to be a long, slow grind which may take as long as 6 to 9 months to complete. Along the way will be fits and starts, but the end game gets closer and closer, somewhere around the summer of 2010 or spring of 2011. The US economy is dead, killed by the bankers, the Fed and the government morons who were supposed to be in charge but rather deserve nothing short of a hangman's noose.

Meanwhile, commodities showed their true colors. Oil fell 99 cents, to $61.05 per barrel. It is still overpriced by at least $10 per barrel. Gold gained $13.80, to $951.20 per ounce. It is headed back above $1000, probably by the middle of June, if not sooner. Silver gained again, up 17 cents, to $14.45 per ounce. Silver may be the very best investment of 2009. It could hit $30 by year's end.

Bonds were hammered, pushing yields higher, as the US dollar was knocked down in vicious trading on the Forex markets. The beginning of the end of the greenback as the world's reserve currency is at hand. Within the next two years at least a dozen municipalities will default on their debt and three or more states - New York, California, New Jersey and maybe more - will default for failure to make necessary cuts in spending and staffing.

The world has noticed that the US is full of crap, financially, politically, socially and morally. And the world is not going to take it lying down. Revenge, by the countries the US has abused, misused, bombed, threatened, and tortured, will be complete within years. If you are one of the people out there keeping your government job, hoping for the best, or, worse, not even thinking about the state of our nation, you will be caught by surprise.

Preparing for the end of the short reign of the USA as the world's superpower is serious business. And most of us are unprepared, unable to see the light, see the obvious signs and take action. Our government has been off the rails for most of the past decade, the corruption rampant and moral turpitude complete. It's not a matter of left or right, Democrat or Republican. It's all of them, together, who have misused their positions, abrogated their authority and ignored or disobeyed the laws of the land. We, the people, have allowed it, and we, the people, will pay a heavy price for allowing our government to run amok and afoul of the constitution.